Aging Agricultural Aircraft Could Be Tax Exempt
- May 20, 2016 | Gail Cole
Agricultural aircraft are officially exempt from Arizona transaction privilege tax (TPT), effective for taxable periods beginning on and after April 17, 1985. That’s right: 1985.
Under Arizona House Bill 2133, gross proceeds of sales or gross income derived from sales of agricultural aircraft are deducted from the tax base. Agricultural aircraft is defined as follows:
“An aircraft that is built for agricultural use for the aerial application of pesticides or fertilizer or for aerial seeding.”
Why bother?
Farm equipment is generally tax-exempt. The agricultural aircraft exemption was deemed essential, according the Arizona Tax Research Association President Kevin McCarthy, because of “concerns the Arizona Department of Revenue was going to reclassify crop dusters as aircraft,” which is normally taxable.
Agriculture is bigger business in Arizona than one might think. Top crops include:
- Broccoli
- Cabbage
- Cantaloupe
- Cauliflower
- Lettuce
- Pecans
Retroactive refunds
Taxpayers may seek a retroactive refund for agricultural aircraft purchased new on or after April 17, 1985, provided the following are true:
- The aircraft has been “used for commercial production of agricultural, horticultural, viticultural and floricultural crops and products.”
- The taxpayer can establish “by competent evidence the amount of tax paid for all taxable periods and the amount, if any, attributable to new agricultural aircraft” used for the reasons described above.
- The refund request is filed on or before December 31, 2016.
For additional details, please see HB 2133.
Facilitate management of sales and use tax exemptions with Avalara AvaTax. Learn more.
photo credit: BRITISH COLUMBIA 1971 MUNICIPAL EXEMPT plate via photopin (license)
